Gold Futures Trading 2012-06-21

This week we saw gold futures trading knock the price of the precious metal down 70 points from its latest top. This occurred after the FOMC announced a no interest rate change and Bernanke announce that no new quantitative easing was imminent. How much of the price drop actually had to do with the facts announced in the news, as opposed to crazy brained speculators and fund managers, is unknown. At the time of the price crash I was long, and I am still of bullish mind towards gold because of what my weekly charts and COT data are telling me. As a result I held on to my last position a little longer than I should have hoping that the price drop wouldn't be so severe. I reached my pain threshold at around 1600 on Thursday (June 21) morning. I exited the trade with nearly 25 points profit. At the most recent top I was 65 points profitable. I'm a little disappointed in my gold futures trading, but I walked away with cash in my pocket so I'm happy.

Because I am still bullish, I have been looking for a reentry. I found it this evening, Friday, June 21, at 21:19 at a price of 1570. My entry price is just 3 points shy of my entry price last time. I will be keeping a keen eye on price with my stop loss tight. My entry is on a 60 minute chart MACD divergence. At least, its about as close to an MACD divergence as I expect from a gold 60 minute futures chart.

Here is a 60 minute gold futures trading chart demonstrating my exit and reentry. The chart is for the December contract, which is the contract I am trading, rather than the August front month.

As you can see, there was some support at 1600. That price level was breached on Wednesday after the FOMC announcement, but that was on volatility so fast that I was hesitant to exit because I know from experience that prices often bounce up and down several times before finding direction much later. I decided lose the position when prices started dropping early Thursday morning, because I suspected they might just continue on all day, and they did.

We can see what looks like an MACD divergence starting to form around the 1570 level in this 60 minute price chart. As I am still of bullish mind for gold futures trading, and hoping to see a larger run up than we have been seeing the past month, I decided to take advantage and use the divergence as an entry point. There is no real signal on the daily chart, except that prices haven't quite challenged the last low (yet!?!?). Also, that MACD divergence from earlier in this month looks so good that I'm still expecting a larger upswing from it. That being said, I'm keenly watching prices for a drop so I can exit fast. I'm wary of this situation.

In other markets, I am still watching sugar looking for a long entry. I think I may get one tomorrow or early next week. Take a look at this daily char for October sugar futures.

What we see in this daily sugar futures chart is a very nice MACD divergence on the MACD histogram for a longer divergence, and a more immediate divergence that just occurred with the MACD moving averages. Price shot up breaking through the moving average, and has now returned to rest on it. If I see a bullish divergence on the 60 minute chart as price is resting at the daily moving average, it will be a prime long entry into this market. I will be watching quite keenly for this.